This project is focused on the identification of physiologically critical functions and mechanisms of action of NF-kB transcription factors and their regulators in health and disease. NF-kB is a family of related dimeric transcription factors that serve as primary intracellular mediators during innate and adaptive immune responses. In addition, and importantly, dysregulation of NF-kB plays a major role in inflammatory and autoimmune diseases as well as numerous tumors. It is thus imperative to understand the functions and mechanisms of action of NF-kB factors, as this will be required to devise appropriate strategies for therapeutic interventions aimed at curtailing dysregulated NF-kB. To identify physiologic roles we make use of mouse models engineered to lack components of the NF-kB transcription factor family or their regulators. Our work is focused on alternatively activated NF-kB factors and on Bcl-3. The alternative NF-kB activation pathway is initiated by a subset of TNF receptors. Bcl-3 is an atypical IkB family member that functions as nuclear regulator of NF-kB activity. In FY 2011 we have determined for the first time that Bcl-3 has important roles in the innate defense of a pathogen, Klebsiella pneumoniae. Bcl-3 deficient mice were highly susceptible to challenge with these bacteria in lungs, the normal route of exposure. The mutant mice exhibited a cytokine profile skewed towards an anti-inflammatory state, including reduced production of IFN&#947;and increased production of IL-10. Importantly, loss of Bcl-3 also resulted in impaired bacterial killing by neutrophils, an unexpected finding suggesting a direct role of Bcl-3 in these cells. Together these defects resulted in impaired pulmonary clearance of bacteria, which was accompanied by foci of neutrophilic consolidation and lung damage, and subsequent systemic dissemination of bacteria. Our findings suggest that Bcl-3 controls a critical balance of cytokines and chemokines during the innate response to a bacterial challenge in lungs. In FY 2011 we have also made progress in generating mice with cell-type specific deletion of Bcl-3. Such mice will be used to investigate the role of this NF-kB regulator in B cell development, in defense of pathogenic challenges and in experimentally-induced inflammatory conditions.